Kerala achieves ‘total banking’ distinction

After literacy and universal healthcare, Kerala has achieved another distinction — ‘total banking’. Federal Minister of State for Finance Pawan Kumar Bansal announced at a meeting of the State Level Bankers Committee (SLBC) here yesterday. He said Kerala was the first state in the country to ensure at least one bank account to every family. These families have been provided with ‘no-frills accounts’, a pass book and an automated teller machine (ATM) card. The account makes the family eligible for a general-purpose loan up to Rs25,000. “Kerala started the race for total financial inclusion along with other states. While the state achieved the unique feat, the others are lagging behind. Four states have assured us that they would meet the target by March 2008”, Bansal said. SLBC sources said the campaign had succeeded in Kerala because of high number of expatriates working in various countries across the world. All the families of the two million non-resident Keralites have been maintaining at least one account since they are getting remittances through banks. The NRI deposits constitute more than 40 per cent of the total bank deposits in the state. Although Kerala accounts for only 1.13 of the total population in the country, the state has 5 per cent of the total bank offices. The state has 3,554 commercial bank branches, including 2,410 in the public sector. Curiously the backward district of Palghat was the first district in the state to achieve 100 per cent financial inclusion. The honour came after Palghat became India’s first IT-enabled district headquarters last year. It was followed by Ernakulam district. The initiative to achieve 100 per cent financial inclusion was taken by the State Level Bankers' Committee as per the Reserve Bank of India (RBI) guidelines. The apex bank wanted all states to provide 'no frills' account and a General Purpose Credit Card for extending need-based loan facilities to all households. The SLBC kicked off the drive by conducting a survey to identify families that did not have bank accounts. Different banks were allocated targets as per the survey results. The cooperative banks, which have a large network in the state, were also associated with the campaign. SLBC sources said that several families had refused to open accounts, saying they had no money to operate the accounts. They joined the banking network after they were convinced that the accounts would bring loans and agricultural credits besides helping them in promoting a saving habit.